New NAR guide explains types of agency to consumers 

The National Association of Realtors' latest consumer guide tackles the question of what makes a real estate professional an agent, and — subtly — some of what makes an agent a Realtor.

It starts with the basics: "A licensed real estate professional is your agent when you have hired them to represent you as you buy or sell a home."

And while this may seem obvious, the guide takes pains to point out that sellers usually establish this relationship via a listing agreement, and many buyers now follow a different path than they would have before August 17.

"Buyer's agents — those who are required as a part of the National Association of Realtors settlement of litigation related to broker commissions — will ask the buyer to sign a written buyer agreement establishing the terms of their relationship prior to touring a home," the guide says.

Many flavors of agency: The guide starts with single agency, where an agent represents either a homebuyer or seller. It also explains dual agency, "which allows an agent to represent both the buyer and seller at the same time."

It avoids any debate over the ethics of dual agency, but says that in states where it is permitted, some form of disclosure and informed consent is usually required from both the buyer and seller "because of the potential for conflicts of interest."

The guide also explains subagency, where an agent "works with the seller's agent to help serve the seller's best interests and to bring potential buyers to the seller's property." A subagent can't help the buyer in any way that would be unfavorable to the seller. Like dual agency, subagency isn't permitted in every state.

In some transactions, agents from the same brokerage may be assigned to represent the buyer and seller and "avoid potential conflicts of interest." States that allow this will likely require both sides to agree to this arrangement.

Is agency required? The guide tells consumers that their relationship with a real estate professional can be "any type — agency or non-agency — that is permitted by state law."

One example of a non-agency relationship is a "transaction broker," or facilitator, which is a neutral third party who helps a buyer and seller reach an agreement on the terms of a sale. As with other types of agency, this is not allowed in all states.

Why NAR is doing these guides: It's part of the ongoing series designed in part to help NAR get ahead of antitrust concerns after having the Department of Justice "implicitly indicting us for not educating the consumers," association CEO Nykia Wright told NAR's board of directors last month.